Kicking the can down the road, but how far?

BBC:

Greece will get loans of more than 130bn euros (£110bn; $170bn) and have about 107bn of its debt written off. In return, it must slash its debt from 160% to 120.5% of GDP within eight years and accept a permanent EU economic monitoring mission…

Greece will undertake to reduce its debt to 120.5% of GDP by 2020. Private holders of Greek debt will take losses of 53.5% on the value of their bonds, with the real loss as much as 70%. Greece’s economic management will be subjected to permanent monitoring by eurozone experts on the ground. Greece will amend its constitution to give priority to debt repayments over the funding of government services. Greece will set up a special account, managed separately from its main budget, that must always contain enough money to service its debts for the coming three months…

The BBC’s Stephen Evans in Brussels says the agreement will mean deeper cuts in public spending than Greece has planned….Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, saw no reason to cheer the bailout. “So what?” he told Reuters. “Things will only get worse. We have reached a point where we’re trying to figure out how to survive just the next day, let alone the next 10 days, the next month, the next year”…

Successive rounds of austerity measures, demanded by Greece’s international creditors, have failed to restore growth and have provoked clashes between protesters and police. The Greek government fell last year after ex-Prime Minister George Papandreou called for a referendum on the eurozone rescue package. He was replaced by Mr Papademos, an unelected technocrat

Bloomberg: “In return for the new cash, Greece signed up to cuts in pensions, the minimum wage, health-care and defense spending, as well as layoffs of state employees and asset sales. It must implement that austerity with unemployment already topping 20 percent…The biggest near-term risk may be elections which could be held as soon as April. In a poll released today, nearly every Greek questioned by GPO for Mega TV said the budget measures promised by the current government were too harsh.”

In addition to its unpopularity, the plan assumes that virtually all private bondholders will go along, and that the politicians will do what they’ve promised. Question: when will the latest bailout begin to unravel?

One Response to “Kicking the can down the road, but how far?”

  1. feeblemind Says:

    I am amazed the EU leaders have been able to keep the music playing this long. There is a good column skeptical of success for the bailout here:

    http://openeuropeblog.blogspot.com/2012/02/many-questions-around-second-greek.html

    and here:

    http://blogs.reuters.com/felix-salmon/2012/02/21/the-improbable-greece-plan/

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